European Central Bank Calls Libra a “Cartel-Like” Operation
FRANKFURT – Member of the Executive Board of the European Central Bank, Yves Mersch, shared some insights about the history of money circulation, later focusing on the future of Euro, and Facebook’s new venture aiming to become a global cryptocurrency standard, during his speech at the ESCB Legal Conference yesterday morning.
Originally from Luxembourg and a legal expert, Mersch not only had expressed a series of concerns regarding the Libra cryptocurrency, but he went as far as calling it a “cartel-like” business.
He said that despite the hype around Libra, the digital currency behind the largest social network on the planet is no different from any other already established private currencies.
On that matter, Libra will be centrally issued by the Libra Asociation, a group of hi-tech industry titans, including Vodafone, Uber, eBay, Spotify, and cryptocurrency broker Coinbase, among others.
Therefore, it’s no different from Fiat money, and if anything, similar to other electronic money. Libra will be distributed to its users digitally in exchange for their respective fiat currencies.
Last week, National Bank of Switzerland, also announced that Libra’s documentation lacks important details and it’s vague.
In addition, Mersch emphasized in the ability payments and telecom organizations involved in Libra Association possess, to control the issuance of the Libra coins, the governance model, and even whether a transaction should be considered as legit or not, eliminating the hard-crafted dream of Satoshi Nakomoto, in probably one single line of code, as that is the way pretty much all traditional banking institutions function in modern societies.
Obviously, with so many fancy tech names involved, Libra coins will be able for purchase only through a network of “authorized resellers”, making it exactly the opposite of what Bitcoin and blockchain’s trust system stands for.
Mersch believes that Facebook and its partners will be acting as “quasi-sovereign issuers of currency”, citing that not only is it (Libra) as centralized as any government-issued money, but it is organized like a cartel operation.
When it comes to money, centralisation is only a virtue in the right institutional environment, which is that of a sovereign entity and a central issuance authority. Conglomerates of corporate entities, on the other hand, are only accountable to their shareholders and members. They have privileged access to private data that they can abusively monetize. And they have complete control over the currency distribution network. They can hardly be seen as repositories of public trust or legitimate issuers of instruments with the attributes of “money”.
Under a certain lens, you could say that Yves Mersch is scared of cryptocurrencies and their mass adoption, desperately trying to convince the conference attendants on trusting fiat money over anything else, pointing out the fact that Libra is not any different.
On the other hand, European Officials are not your typical thinkers when it comes to crypto. From what we’ve seen during the past two years, the European Union, not only is fairly updated and aware of cryptocurrencies, but it already implements many of them in governmental use-cases across the Union’s borders.
Tasks forces such as the Blockchain Observatory and Forum are working on a relentless basis with thousands of contributors from all over Europe, sharing opinions, discussing, and proposing regulative acts on cryptocurrencies, not generated by a centralized government body responsible for monetary policy-making, but everyone with a basic internet connection and some thoughts to share.
Concluding, Facebook’s Libra might be riding the crypto train to be easily promoted and adopted, but we shouldn’t undermine the facts that it is 100% centralized and manipulative in all aspects including the supply protocol, price per unit, pairing conditions with other currencies, and in some cases even the ability to regulate the request rate for other currencies.
Although we’ll all love or hate the social networking giant, we should never forget that crypto is only made possible with decentralization.